PM Comments January 28 2025
Good afternoon. Higher trade in the feed grains on Tuesday was able to also pull the soy complex higher, as trade was otherwise quiet for the majority of the session. In the case of corn and wheat, prices spent most of Tuesday perched near the highs for the day, but selling emerged the final 20 minutes to knock values back a few cents into the close.
CH finished Tuesday at 4.85 1/4, up 3 and 1/4. CK was up 3 and 3/4 at 4.96. SH closed unchanged on the day at 10.45. SK finished at 10.59 1/2, up a penny. WH was up 9 and 3/4 at 5.45 1/4. Products were higher, March soybean meal closed at 301.60, up 80 cents/ton, and March soybean oil closed at 45.13, up 13 points. Outside day higher for meal. Cattle markets were higher once again, February live cattle closed at 208.55, up $2.87, and March feeders closed at 278.25, up $3.00. New contract highs again for live cattle and an inside day for feeders. February hogs closed at 83.90, up 85 cents, and also had a gap-higher open this morning. Outside markets are trading mostly higher, crude oil futures are up around 70 cents/bbl, the Dow Jones index is up 100 points and the US$ index is up 50-60 points. The S&P500 is up 40 points and the NASDAQ is up 300 points. Inside day for both crude oil and the NASDAQ.
Spreads were mixed; corn spreads ended the day down a penny and a quarter to up 2 and a quarter, and soybean spreads were down a penny to down 4 and 1/4. CH/CK closed at -13, down a penny and a quarter, and SH/SK closed at -14 1/2, down a penny.
USDA again announced daily sales this morning for the second consecutive day; private exporters reported the sales of 132,000 mt's of corn for delivery to South Korea during the 2024/25 marketing year.
Wheat futures mostly led the upward charge on Tuesday based on what some newswires were calling profit taking, but a jump in open interest in both the March and May contracts would argue this was new buying and not a covering of old positions. It seems the market has found some sort of perceived 'fair value' over the past month, as prices have largely traded inside a 30-cent range since the middle of the December and have so far held the contract lows made on January 10th (though they came within spitting distance of them both today and yesterday). Fundamentally, the market's focus continues to be on the global scale, as any production assessments on the US crop are simply difficult to make this time of year while the crop is dormant. In Russia, the looming export quota that is set to take effect in February lingers in the background, while crop prospects in Australia remain good through harvest; officials estimate production in the 2024/25 season will be up more than 20% from the previous season, and will likely rank in the country's top three biggest production years ever.
Outside of this, there is not a lot else affecting flat price in the corn and soybean markets that isn't related to weather in South America or tariff talk from President Trump and his administration. The majority of traders are reluctant to take on any sort of new sizeable positions until more is known on the trade relationship with not only China, but also Canada and Mexico, which has produced a bit of a pause in the markets with prices near their highest level since early summer in corn and late summer in soybeans. For corn to take the next leg higher, the market will need to see noted delays in planting that significantly lower acreage or an all clear from the Trump admin that we will not be engaging in a trade war with our biggest buyer of corn. And even should the intended safrinha corn acreage get planted, weather will still be a factor as delays will make it imperative that an early end to the wet season in April does not occur. In the case of beans, harvest data in Brazil will largely determine the overall trend of prices in the short to medium term, but we would caution that a record crop has been mostly priced in over the course of the last couple months, and that eventually the market will turn the page to something else; will that something else be US planted acres? A new trade war with China? A new frontier in terms of biofuel production and domestic use? It's hard to say, but these look to be the big questions in the bean market going forward.
Argentine weather forecasts at mid-day trended slightly drier in the north and northwest of the country in the 5 day period, but trended wetter for areas west and south of Buenos Aires in the week two period. In Brazil, regular rainfall is expected to continue throughout most all of the country through the next week, but the week two forecast then shows a shift to drier conditions through the central part of the country and into Paraguay. Temp anomaly forecasts show the warmest conditions over the next week will be centered in east-central Argentina, while the bulk of Brazil will see temps that are average to below average.
In the US, models are continuing to advertise a rain event for the south and southeast Wednesday-Friday that will possibly produce some snow and ice on the back side for the north-central part of the Midwest through the day on Friday and into Friday night. The northeast looks to see snows tonight into tomorrow, while in the northwest, models see a mix of precip returning to the area on Friday night/Saturday morning. By process of elimination, this leaves just the far southwest into Mexico as the lone dry spot through the country into next week. On the temp side, models at mid-day show cold air in Canada making its way slightly further into the northern US next week, but otherwise offer the same general outlook that has been seen for the past several days in showing well above average temps for a majority of the country into February 12th.